Taxpayer advocates fret over Waco broadband discussions

As residents of Waco discuss the lack of broadband availability, critics worry for the pocketbooks of taxpayers and counsel patience as new technologies emerge that could help bridge the urban-rural high-speed internet divide.

A series of town-hall meetings kicked off in March at Hewitt Public Library in Waco to discuss the dearth of broadband in parts of McLennan County. John Lawler, senior policy fellow for Glasshouse Policy, told the Waco Tribune the goal is to “collect information and experiences, research the issue and present policy recommendations to lawmakers in the next session.”

David Williams, president of the Washington, D.C.-based Taxpayers Protection Alliance (TPA), said he’s seen too many horror stories of municipalities unhappy with their broadband options deciding to create their own government-run networks. TPA has collected a round-up of hundreds of such projects around the country on its website Broadband Boondoggles. Most such networks carry long-term debt, often in the tens or hundreds of millions.

In Texas, at least, that currently isn’t an option, as the Texas Legislature passed a law in 1995 prohibiting cities from getting the permits needed to provide internet services. The U.S. Court of Appeals upheld that law in 1999 after it was challenged by Abilene.

On the other hand, electric cooperatives can provide broadband services in Texas, a practice that is prohibited in some other states. Critics say that can have a chilling effect on the free market, as private enterprise must compete with utilities that have received government grants and property tax breaks. They often cross-subsidize their broadband divisions with revenue from the electric divisions, which can make a balance sheet look better than it really is.

“We would hope that Texas would learn from other localities and not waste money on studies or municipal broadband,” Williams told The Texas Monitor.

States across the country have increasingly been providing more grant money via taxpayers to local municipalities to facilitate the growth of broadband so it wouldn’t be unrealistic to see a similar push in Texas.

Just look a few states over at Alabama, which passed a bill this spring that offers grants to telecommunication companies to provide broadband, up to $1.4 million per project with a still-to-be determined total cap on the program. The bill’s sponsor, Alabama state Sen. Clay Scofield (R-Guntersville) originally intended his bill to provide tax credits to providers instead, but members of the Alabama House overhauled the bill to fall in line with President Trump’s infrastructure initiative.

Vance Ginn, director of the Center for Economic Prosperity at the Texas Public Policy Foundation, said taxpayer funding for high-speed internet access should be out of the government’s purview.

“We find that the government is there to preserve liberty and when you get into broadband and Wi-Fi and these other things, you’re getting away from that,” he told The Texas Monitor.

Regulatory burdens

Some tech experts say that rather than throw more money at the problem, states like Texas should look at where regulatory burdens may be impeding broadband growth.

Tom Struble, tech policy manager at R Street Institute in Washington, D.C., said that while Section 224 of the federal Communications Act gives the Federal Communications Commission (FCC) authority to regulate rates of pole attachments (that is, the equipment attached to utility poles, such as fiber-optics), the section has a “reverse presumption” provision that allows states to certify that they can regulate those attachment rates.

“It’s a weird, sort of quirky law because by default the FCC’s rules apply across the board, but states can reverse or preempt the FCC and adopt their own pole-attachment regime,” Struble told The Texas Monitor.

Seth Cooper wrote in the Free State Foundation that states can aid in broadband growth by using the FCC’s formula that balances the need to keep the attachment rates low while also ensuring that the owners of the poles recover their costs. Struble also suggests a “shot clock” to ensure that decisions on pole attachments are made in a timely manner and therefore don’t impede broadband infrastructure construction.

The promise of 5G

As states and municipalities debate the lack of broadband access via wireline technology, new technologies are emerging that could close the divide at a much lower cost.

Williams chuckles at the paradigm shift where the federal government is pushing forward with 5G wireless and spectrum auctions as localities like Waco debate fiber-optics, which could be left in the dust by improving wireless technology. In his mind, it’s usually D.C. that’s more backwards looking.

“I think the contrast is interesting,” he said.

5G is expected to bring download speeds of 1 gigabit per second. The transmission equipment needed is about the size of a breadbox and can be installed on buildings or utility poles. Implementation of 5G should be much lower than the often prohibitive cost to string fiber to homes and businesses, which makes it hard for providers to turn a profit and has made sparsely populated areas of Texas fall behind on broadband availability.

Brendan Carr, the newest member of the FCC and the wireless czar of the panel, is leading the fight for 5G development, pushing the commission to adopt rules to help deployment of the technology. He said state and local laws are more important, however, because the local zoning authorities review and approve individual small cell site deployments.

“We don’t actually play that role at the FCC in terms of giving a thumbs-up or thumbs-down on particular deployments,” he said in March. “Some states are moving forward in forward-thinking ways with some state-level small-cell bills. Texas is one of those that has made it easier to deploy small cells.”

Well, not exactly, although it tried. A bill from Sen. Bill Hancock (R-North Richland Hills) that would have given private companies easier access to utility poles to install small cells for wireless deployment passed the Senate but died in committee in the House. The Texas Municipal League fought hard against the bill, complaining about preempting cities’ control of rights-of-way, cost recovery and the aesthetics of the poles.

What is broadband?

As Waco debates its internet speeds, it’s important to note that a 2014 mapping survey completed using federal stimulus funds found that everyone in McLennan County could access download speeds of 10 mbps, which until recently met the FCC’s definition of broadband. That access includes mostly fiber in more densely populated areas; mobile and fixed-wireless in more rural regions.

The FCC’s move during the Obama administration to redefine broadband as 25 mbps created a paradigm shift, both in how people think about their own speeds and how state and local governments think about funding to boost the speeds.

Meanwhile, Netflix recommends that speeds of just 5 mbps are needed to stream high-definition movies on its service — one of the more common high-speed methods of internet usage in residences. Even two people can stream at 10 mbps.

“The thing that government often gets wrong is they’re looking at the present, whereas entrepreneurs in the private sector are looking to the future,” Ginn said. “If [fiber is] obsolete in a couple of years then taxpayers will be getting the short end of the stick.”

Johnny Kampis is a reporter for The Texas Monitor. Kampis formerly served a similar role at Watchdog.org. Over the course of his nearly 20 years in journalism, he has been published in such outlets as the New York Times, Time, Fox News, and Daily Caller.

6 COMMENTS

Actually, S.B. 1004 on wireless siting and access to public ROW and municipal streetlight poles was enacted last year (June 2017), and even prior to that municipal utilities in Texas have been required to provide non-discriminatory access to their utility poles at rates that do not exceed the FCC’s pole attachment rules for over 12 years. Also, 5G is not going to supplant fiber, even if wireless is hugely successful it still requires a tremendous amount of fiber for backhaul. And, carriers such as AT&T have recently expressed doubts about the business case for 5 G fixed wireless and are more focused on 5 G for mobile. https://www.rcrwireless.com/20180426/carriers/att-more-excited-about-firstnet-fiber-5g-evolution-than-5g-fixed-wireless-access-tag6

People need to understand that there are physical distance limitations of traditional service over landlines and cable. The solution is expensive and requires extensive investment in infrastructure. They sing give that away for free

I decided to check the “Broadband Boondoggles” site to see what information they provide. First off, the copyright date on the site’s footer says 2017 – are they even updating it?

More specifically, I found that they disparage the local ECFiber.net project (in VT) of which I have personal knowledge. They state that as of January 2015 ECFiber has spent $9M to connect 1,200 subscribers (“an astounding $7,500 per customer.”)

– As of January 2018 they have connected over 2000 customers (cost per subscriber is now roughly half their reported number)
– They’re hampered by the pole “make ready” process by the incumbent monopoly carriers who are slow to respond. They could connect subscribers faster if the carriers would follow their legal make-ready obligations.
– ECFiber is a private community effort, entirely funded with grants and private equity/loans, so I’m curious how they could even have filed a FOIA request.
– They’ve now raised $23M capital (from the private markets), to reach 20,000 subscribers.
– This gives a system-wide average cost of $1,150/subscriber – a very attractive cost

I’m sure there are false starts and overruns for many municipal projects, but if this outdated information is typical of the remainder of the TPA site, then I would be reluctant to accept any of its conclusions without doing my own research.